Australian dollar closes due to strong US equity markets

THE Australian dollar closed firmer after lifting back above 105 US cents in response to a positive session on US markets.

THE Australian dollar closed firmer after lifting back above 105 US cents in response to a positive session on US equity markets in offshore trading.

At 5.00pm AEST, the Australian dollar was at 105.28 US cents, up from yesterday's close at 104.50 US cents.

During the local session, the local currency moved between a high of 105.51 US cents and low of 105.11 US cents, according to IRESS data.

The local unit broke through 105 US cents overnight as a positive finish on Wall Street prompted investors to exit some US dollar positions in favour of currencies such as the Australian and New Zealand dollars.

The Australian dollar gave up some of those gains during today's local session as market players sought to take profits from its recent appreciation against the US dollar and Japanese yen.

CMC Markets senior dealer Tim Waterer said the Australian dollar was trading in subdued conditions.

"It would appear that traders are waiting to see an improvement in Australian economic indicators before jumping back into the Australian dollar with any sort of confidence," Mr Waterer said in a research note dated March 16.

A senior currency analyst at financial markets research group Forecast, Lee Wai Tuck, said the Australian dollar had come under some pressure as investors sought to sell the currency on rallies.

Mr Lee said the Chinese government's recent downgrade of economic growth targets, as well as ongoing worries about euro zone sovereign debt and some sluggish Australian economic data, were behind the greater willingness to offload the Australian dollar.

"The sentiment has changed a bit," Mr Lee said from Singapore.

The Australian dollar broke through 88 Japanese yen and reached a 10-month high of 88.10 during the Asian trading day.

Direction during tonight's (AEST) offshore session was expected to com from the release of the US consumer price index report for February.

Market economists expect a headline rise of 0.5 per cent, while core inflation was forecast at 0.2 per cent.

"If the data is a bit higher than expected, then you are likely to see the Aussie and Kiwi come under pressure," Mr Lee said.

Industrial production data for February as well as a private sector measure of consumer confidence were also due.

Several US stock index futures and options as well as stock futures and options, were due to expire during Friday's US session.

The Reserve Bank of Australia's trade weighted index was at 78.3, up from yesterday's close of 78.1.